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Jim Grant On Gold's Liquidation Sale: A "Vexing But Wonderful Opportunity"
Don’t tell Jim Grant, the publisher of Grant’s Interest Rate Observer, that gold is a hedge.
The author and publisher said the metal is much more dynamic; providing a trifecta of price, value and sentiment, and investors should have exposure to it.
“[G]old is an investment in monetary and financial disorder – not a hedge. You look around the world and you see exchange rates are properly disorderly, when you look around the world of lending and borrowing -- we are in a regime of price control by another name, so-called zero percent rates and quantitative easing by the world central banks – we are in one of the most radical periods of monetary experimentation in the annals of money,” Grant told Kitco News Thursday.
Grant added that it could be that it all works out, albeit a very “low probability.”
“You want to have exposure to the reciprocal asset of the paper assets that are the most popular - so gold, to me, is now the conjunction of price, value and sentiment, and I am very bullish indeed.”
Gold prices are on track for its longest run of losses since 1996. After reaching five-year lows this week, the metal was relatively quieter on Thursday with prices slightly rebounding on some bargain hunting in the spot market. Kitco’s spot gold was last up $0.60 at $1094.60 an ounce.
Grant summed up the gold selloff as “Mr. Market having a sale,” and added that the downward spiral is “terrifically vexing but a wonderful opportunity.”
He explained that no one knows the bottom for the metal and that should not be the sole focus.
“The important thing to recall is why those of us who own it, bought it. What is it about gold that ought to make it appealing – when it seems to be absolutely the thing you don’t want to have.” He added that gold thrives in the face of monetary turmoil, disorder and uncertainty, noting, “I think we have all three of these things.”
On the topic of U.S. Federal Reserve rate hikes, Grant said the central bank is in a hurry to raise rates.
“The Fed feels it must act just for institutional pride; but, money supply growth is dwindling, the turnover rate of money likewise, the only thing that is dynamic in the world of money and credit is the issuance of more and more dubiously sourced debt, and more and more lenient terms,” Grant said. “What debt does is two things: it pushes forward consumption and pushes back evidence of business failure,” he added.
Grant said he likes owning physical gold particularly South African Kruggerands. He added he is also the owner of “too many gold mining shares” for which he has, “a great deal of worry for the present but a great deal of conviction for the future.” Mining stocks have suffered even more since lower gold prices means less revenue per ounce of the metal for producers. The Market Vectors Gold Miners exchange-traded fund (GDX), which consists of stocks of gold-mining companies, was down $1.70, or 11%, to $13.72 on Thursday.
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You are correct. Gold itself has little value, it's all perception and lust. Gold isn't like other commodities, it's not acually "used" industrially like iron ore, or agricultural products. Gold is simply stored or made into jewelry (which is essentially the same as stored).
Annual mine production of gold is about 2,500 tonnes, and only 320 tonnes is used commercially and even some of that is eventually recovered. But that 2,500 tonnes only adds 2% to the existing worldwide stockpile.
Now imagine a stockpile of say, iron ore, where there is already a 500 year stockpile of iron ore that will be used commercially, and every year, that stockpile increases by another 8 years.
That's what's happening with gold.
Hard currency is always appreciated as a trade token during periods of economic collapse and hyperinflation. Sure, real goods are good to have, and can probably be traded, but barter is utter shit in terms of economic efficiency.
Those who fail to learn from history will be impoverished. Anarchy is a transition period, and rarely lasts long.
"
Grant summed up the gold selloff as “Mr. Market having a sale,” "
We should just be authentic and say that Mr Market is dead and buried.
What we have now has nothing to do with one market in gold. It is two markets in gold, one physical, and one paper. The paper dwarfs the physical and drives prices wherever they want the physical prices to go.
The only real question is how long this will continue.
China was supposed to have a physical market separate from paper, but I have yet to see whether that will indeed be separate or not. WS banks are buying into that market so they can manipulate it via unlimited printing. China has also not shown itself to have any motivation different from the US Fed in fighting gold.
Having said all that, I will be buying more gold, question is when?
sounds similar to what's planned for the dollar: one domestic use, one for foreign
"Mr Market is dead and buried"
Not dead, just hibernating.
When that bear wakes up,
he's going to be VERY hungry!
I did not hear anything he said, I was watching Daniella.
Gold futures price manipulation has been going on for a long, long time. It's obvious to anyone who charts it on a regular basis. But, the charts do provide a guide as to what TPTB might have in mind.
Right now, GC is due for a breather, a potentially sizeable bounce at 1072.3 (Aug contract) off of an important channel bottom and Fibonacci level. But, the charts suggest further downside after that. This might not (and, probably shouldn't) affect your plans for long-term physical holdings except to the extent it helps to time your purchases/sales.
BTW, I've followed Jim Grant for a long time and consider him one of the smartest guys in the room. He's frustrated, like many of us, that "markets" are no longer actual markets and that the central bankers' experimentation will end very badly. His economic forecasts (and, mine) can easily be rendered absurd by predatory hedgies/central banks. The question is "for how long?"
http://pebblewriter.com/update-on-gold-jul-24-2015/
Clicked your link. It would be interesting to know your thoughts on getting to 891? Timing?
Paper transactions are simply a "deferred exchange." Holding physical gold and silver is simply a "completed exchange." So it's your decision whether to complete the exchange now, or trust that the deferred exchange will be actually completed later. Trust your paper, or trust your metal.
I am surprised at the number of ZH posters whining about the price of gold. Are they actually purchasing the physical hoping to make a dollar! Crazzzy.
I can see investing in paper gold to make fiat but physical? Not in today's a manipulated casino.
In the old days of a real market when gold dropped it indicated the currency was stronger. You were a winner on both sides,,, the perfect hedge.
Today everything's a scam and we will have to wait till it burns out.
You are being scammed on two fronts,,, Stocks and Gold. I'll bet a couple of coins that when this circle jerk of an economy corrects gold will be a winner.
Remember, put your money on 23 Red.
sorry morons its dollars you want one of the stupidist things heard on bloomberg this morning almost as stupid as you pm loving morons is that exports are down becuase the dollar is up bullshit the dollar is up because the world economy is tanking its called deflation
All this hate! Realize we're all in the same frick'n boat and the boat is sinking. Paper, pm's and guns are all in danger.
Please explain to us morons what the FED will do when the deflation spiral hits at zero interest rates and debt service overhead nearly incapable of advancing rates by .25 % or they'd have raised them already incrementally as Greenspan did in his time.
You watch Bloomberg and call ZH readers morons... Do you compute?
It's too funny, they jack up the dollar and tell you gold is so bad while they buy it and send it to israel....the masses, as usual, just lap up their lies and deceit.
I am sure they want no Americans and westerners to have anything of value...plus now they have controlling interest in most of the gold mines and corporations as they have "lent" them money... they can step in, appoint their Directors and friends, they own the whole thing... then kick you out of your homes as the economy tanks. Their plan is working like clockwork. You shall be totally dependant on them.
Gold is so cheap now think I will buy some. I don't want all those schmucks to snap it all up.
If it goes cheaper I shall buy MOAR !!
If you don't want to be a slave, you had better have something to keep you free.
To pay the Ferryman........ he won't be taking dollars.
precious metals will bottom during the course of the crash, but will be the first to recover / appreciate (as the markets repeatedly fail)
Elliot Wave just issued a interim update about gold. They expect a countertrend rally to around $1300. They are a contrarian financial website and much (but not all) of what they say has to do with sentiment. Bullish sentiment on gold is very very low, and this, they figure is actually good for a gold rally.
Who cares about sentiment when the open interest is full retard bullish.
I don't like Mcdonalds, my sentiment has never bankrupted them.
I don't drink many talking heads, but when I do I drink Jim Grant.
Stay sane my Friends
Just look at gold mining stocks after the crash of 1929, they went through the roof.
Millions were despondent, in bread lines, begging for work, unable to care for their families.
All while the evil ones, behind the scenes, were snapping up all of the useful assets of the nation, buying them for pennies with glee while the masses suffered immensely.
Understand moneychangers now?
Buy when there is blood on the streets – but first cause the blood on the streets.
"ust look at gold mining stocks after the crash of 1929, they went through the roof." ...and then went bust...is there a SINGLE gold mining stock still traded from that era?
HA, Hasbara you are so funny... Where do you live in Israel? Are you buying gold in between comments?
Just look at gold mining stocks
On March 10th, 2014, some brilliant ZH crystal ball gazer recommended junior gold stocks as the perfect play for gold. So I put together a paper portfolio of 13 of those stocks.
And throughout this period all I heard was "just keep stacking".
Well, I guess if that was a good idea 1.5 years ago, it's a brilliant idea now.
He added that gold thrives in the face of monetary turmoil, disorder and uncertainty, noting, “I think we have all three of these things.”
And we have had all those things for the last four years. See gold thrive.
Gold is great for electrical contacts; sorta great for filling teeth; good for jewelry that doesn't make your skin turn green; and ridiculous as a store of value or a medium of exchange.
I prefer buying a dry steel building on a low taxed undervalued piece of land in the path of growth. I prefer filling it with pallets of double-jambs and portland cement to buying gold.
They're shovel ready material and energy storage (lots of energy goes into making cement). If there's a collapse, you've got materials people will want to trade for. If there's no collapse you have materials people will want to trade for. And they have great shelf life and fire retardance and they're harder to steal than gold. What's not to love.
Pile on you gold bugs. Rational thinking always wins in the end.
Cement is a hygroscopic material meaning that it absorbs moisture In presence of moisture it undergoes chemical reaction termed as hydration. Therefore cement remains in good condition as long as it does not come in contact with moisture. If cement is more than three months old then it should be tested for its strength before being taken into use.
Good luck
Therefore cement remains in good condition as long as it does not come in contact with moisture. If cement is more than three months old then it should be tested for its strength before being taken into use.
Read carefully. "Dry steel building". Portland cement used in mortar is not about strength. It's about resisting compression and bonding. And of course double-jambs don't deteriorate at all.
Good luck
What really requires luck is stacking gold. The stuff's not worth much in the best of times. As a medium of exchange (i.e. something to trade with), it's been worth virtually nothing throughout my entire life. The same money spent on real estate throughout my career (just for my own use) has performed wildly better than gold could ever hope to do.
Half of the world,s population (Asia) don't agree with you whereas a few members of large corrupt banks agree with you. I've been many places in the world and gold is always money and doesn't have a shelf life. I use it as a hedge for my real estate investments.
My father bought gold at $50 and sold it at $850 in 1980 and bought real estate. He retired on that.
Half of the world,s population (Asia) don't agree with you
So 3.5 billion people don't agree with me. That makes 2oz of gold for everyone who doesn't agree with me. That's less than $4,000. That's what, 1/3 of the USA poverty level?
My father bought gold at $50 and sold it at $850 in 1980 and bought real estate.
Perfect timing your father had. I knew some people who bought some of that really good $850 gold in 1980. Was 2006 before they could sell it for $851.
But fact is, if he hadn't fooled with gold at all but just bought raw, low taxed ag and timber land with no improvements in the path of growth, his gold investments would be made to look silly.
Seems you never learned anything from your father.
Now you've revealed your complete ignorance (besides investing in cement). The Chinese alone are consuming the entire yearly mine production and then there's the rest of the world and there's no end in site to their demand. It doesn't matter if they're poor. There are billions of them and they don't trust banks and invest in gold for protection.
Funny you mentioned that ag land. He invested in that too and did well but not as well as his outsized return on gold over the same time period.
Please take some photos of your wonderful warehouse full of cement and post a link to it.
WG wrote: I prefer buying a dry steel building on a low taxed undervalued piece of land in the path of growth.
Please take some photos of your wonderful warehouse full of cement and post a link to it.
http://www.zillow.com/homes/for_sale/Todd-Mission-TX-77363/2126365272_zp...
The house is just a big steel building with an apartment in it. Sq. ft is about 4 times what's reported here.
Look at the price/tax history tab.
Four years ago, when I should have bought this, I bought gold. Big mistake and getting bigger each day.
So you have a great history of buying high and selling low so we should take your advice now huh?
So you have a great history of buying high and selling low so we should take your advice now huh?
Based on that sample of one, you are correct. My history isn't good. Interestingly, on ZH, the advice throughout my period of buying was "keep stacking". Go figure!
Actually, my gold will do exactly what I want it to do in the face of an oncoming calamity. It will give me something to trade for a quick trip out of harms way and short term sustenace thereafter. Too bad I've had to waste resources on such an insurance policy ... but it is a sign of the times.
However, at no time during my buying did I have any illusion that gold was money. It is just more convenient simple barter fodder for bribing a pilot and his plane than a pallet of double-jambs would be.
A+ WG! If the Gold Bugs' dream ever "comes true"...they're going to be really suprised at just how heavy the hand of government can be to those "impeding the restoration of faith in paper money".
Whenever there is a tradjedy, the politicians look for a villian...if paper money fails..."Gold hoarders" will quickly be labled a nail in need of hammering...
you sound retarded
you sound retarded
Amazing the number of psychiatrists on ZH.
Unscannable! Unscannable! AAIIEEE
"you sound retarded"...coming from someone that looks at Trump as a leader and "good for the USA"...you're not just retarded, you're mentally certifiable!
Just got this premium increase notice from my favorite retailer:
http://campaign.r20.constantcontact.com/render?ca=774c7f33-2b4b-4aee-987...
So a place that sells gold is telling you they're running out and the price is going to dramatically increase...so buy now!...how nice of them to have your best interest at heart...what were they saying when gold was $1800?
ANY chance they paid $1200 for gold they now have to sell for $1100 and fear may only be worth $900 in a few months? Nah, they wouldn't do that...
The institutions who were holding gold and now selling at a loss are trying to recoup their losses through higher fees.
When gold prices are increasing, the fees are much less, becasue they are making money on appreciation of their inventory.
Relality is that GLD just dumped about 25 tonnes into the market the past week. There is no shortage of gold.
Reality is that the fucking waterfalls didn't work out so well today.
could be.
mind you, there were no problems acquiring physical at $1800
Most bullion dealers will hedge the opposite way of their holding as insurance. The cost of this hedge will be reflected in the spread, and it allows them to make money regardless of the flactuations.
You would go out of business really fast in the Forex Market if you did not cover your positons.
Premium on silver eagles from my dealer is now over $4/oz.
"Premium on silver eagles from my dealer is now over $4/oz."
Keep Stackin! I'm sure your dealer has a boat payment to make...
With all the soverign defaults on the horizon and a rigged gold market, and changes coming in the world order, the trolls here are incredulous... they are obviously paid shills....most likely by YOUR tax dollars.
We need Donald in there to clean house.
Why Gold Prices Are Lower
·
The largest banks such as JPMorganChase are dealing in large quantities of gold derivatives which are lowering the price of physical gold at a time when interest rates have not changed for 7 years.
·
China and Russia are moving away from the US dollar and getting half of the world’s countries to do the same.
·
And the Fed supports pumping up the dollar while keeping the gold price low.
Here is proof:
http://michaelekelley.com/2015/07/20/dear-fed-plz-raise-gold-price/
http://www.zerohedge.com/news/2015-07-09/are-big-banks-using-derivatives-suppress-bullion-prices
Here is where the next recession will start:
http://michaelekelley.com/2015/04/28/next-recession-will-start-with-this-country/
Here are some more signs of a coming recession.
http://michaelekelley.com/2015/05/29/mergers-and-acquisitions-set-record...
http://michaelekelley.com/2015/02/20/fed-warns-of-two-bubbles/
http://michaelekelley.com/2015/02/24/would-you-pay-39-more-than-asked/
Here is how to prepare.
http://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/
Here is how to get your mind off this stuff.
http://michaelekelley.com/category/humor/
Good luck!
Love it. Guys who have had their faces ripped off are giving investment advice. The end is nigh!
Somebody has to cover your bets. And so he shall...
As I don't really trust politicians, central bankers, and the main stream media I feel much more confident and secure having a decent part of my accumulated weath in gold - especially now that China, Japan, Greece are having huge financial problems and most are calling for a bond and stock collapse.
Seems like world is heading for a total financial reset. Scary times indeed.
Beat that you fucking trolls.
CNBC headline
"Puzzled by the dollar outlook? Buy a Big Mac"We're fucked, buy gold
This is not a "buy the dip" opportunity but a warning the global economy has entered into the first stages of what economists call a "sudden stop" - arising from too much (ultimatly untenable) debt that must eventually default.
https://en.wikipedia.org/wiki/Sudden_stop_(economics)
That has to be the cue to listen to some Buddy Miles :-
https://www.youtube.com/watch?v=iIRIEarhj4M
All you old jazzers (and me) can top up and listen to this one:-
https://www.youtube.com/watch?v=Bpe5N0Eb2v8
Anybody trading stocks, gold, bonds based on charts has no clue whatsoever....Even when gold bugs pull out charts it is obvious they are stupid... with the exception of seeing where the stops are for the majority of idiot traders still using charts.
With everything rigged. Chartists need a lobotomy cause they just aren't getting it.
When "chartism" got to a certain level of popularity, it did start to become act as a self-fulfilling prophesy to a certain degree.
Nonetheless, no matter what happens, the chart fits into some pattern or other... or else they make it do so.
Ohhhh....
Now I'm starting to remember why gold was "so cheap" back at the turn of the century.
And now that's it's become apparent that the oil sanctions against Iran which led to "so cheap" after a few years is over, coupled with the delayed, but unpreventable deflation in commodities that occurs during every recession has been finally coming to town....
Given the very recent, and remarkable uptick of (presumably paid) trolls that have appeared on ZH, anyone who doesn't smell the increasing desperation to discredit gold must have one helluva cold.
Forget about the nonsense suggesting that the balls can be kept in the air for many more years. The collapse has begun, and it's accelerating.
The rate that this thread has been read and commented to is astonishing.
IDK, I've followed ZH's advice up until last year, and have been licking my wounds for several years now.
FFS, it's cheaper now than when I started buying in 2008. That makes it a tough sell.
You sound genuine, but your perspective shares the same great weakness as that of the trolls' "arguments", ie. you are myopically viewing gold only through the prism of the U.S. Dollar.
I'll continue to post this simple illustration as long as the mistake continues to be made:
Although it has declined in USD about 6% since I crunched these numbers on July 4, they still illustrate why thinking about gold only in U.S. Dollar terms is a mistake, and often used for propaganda purposes.
The percentage change in the value of gold against these currencies for a two year period ending on July 4, 2015:
Euro +11%
Danish Kroner +11%
Japanese Yen +18%
Swedish Kroner +20%
Norwegian Kroner +22%
Turkish Lira +29%
Brazilian Real +37%
Argentine Peso +58%
Russian Ruble +62%
Ukranian Hryvnia +140%
Thank you for that... very informative!
When the dollar finally "corrects"... ZOOM.
Having said that, the dollar may take a while to correct, due to the false belief around the world that somehow the predators-that-be in the USSA know what they're doing and can escape the debt disaster they created.
You are quite welcome, Ann.
Yes, the dollar may take a while to reflect its true value, but the essential point remains: not if but when.
Gold gets cash out of your bank acct and into your "mattress" during deflation so you will have something to show for it at worst. We all know what it does during inflation.
Yes. I think the huge collapse is starting, so I also believe gold and silver will probably be pushed down further.
But I also think almost everyone will lose almost all their savings soon when the predators-that-be confiscate (bail-in) virtually every form of paper savings.
In which case, everyone who "lost their shirt" buying and hiding physical gold and silver will look like the geniuses of the ages.
agreed. imo, recent volitility in Au is sell off of paper gold.
I bet.
For God's sake, Firebrander, use a spellcheck or a dictionary:
suprised?
tradjedy?
villian?
labled?
Oh, and calm down a little, too. You're jangling my serenity.
Turing Test responses are programmed to misspell words on occasion.
Vexing = He doesn't know and can't predict what gold will do.